Fixed assets are company assets that serve for a long time and are replaced with others only as they wear out. Depreciation of fixed assets is considered to be the gradual loss of property's own use value. During operation or, conversely, downtime, any object of production assets consistently wears out - buildings are destroyed, spare parts and parts wear out, machines, vehicles and equipment fail. We will discuss OS wear, its types and calculations that allow us to determine the percentage of wear of an object in our article.
Depreciation of fixed assets: physical and moral
So, OS wear and tear is the loss of value during operation or inactivity. It can be physical or moral. Physical manifests itself as the loss of technical qualities and characteristics under the influence of time and production processes. Physical wear and tear is divided into productive (in which a loss of value occurred during operation) and unproductive (when an object wears out after being in storage for a long time).
Moral wear and tear is when the value of an object decreases as a result of the appearance on the market of its improved analogues with higher productivity and lower cost.
By studying the logic of physical and moral wear and tear, the duration of wear of a certain OS object is established. These studies form the basis for the calculated standard service lives (SLI) of property and depreciation rates.
Depreciation of funds and its types. Indicators of technical condition and movement of fixed assets
Let's talk about indicators of the technical condition and movement of fixed assets. To begin with, what is wear and tear in principle?
Wear and tear is a reduction in the productive life of assets, their gradual loss of value, natural aging under the influence of time and the environment.
A distinction is made between physical and obsolete depreciation of fixed assets.
Physical wear and tear of fixed assets refers to the deterioration of physical condition, operational properties and a decrease in value caused by the natural wear and tear of assets.
Physical wear and tear is characterized by a standard service life (useful life), that is, the average duration of possible operation in years. The useful life is determined depending on the influence of factors such as load intensity, atmospheric and climatic conditions, durability of the structure, and the frequency of scheduled repairs.
Obsolescence of fixed assets is characterized by a decrease in the value of existing fixed assets under the influence of scientific and technological progress (NTP).
Obsolescence comes in two forms.
- The essence of the first form comes down to a gradual decrease in the value of fixed assets in modern conditions while maintaining the same consumer value.
There is no need for early replacement of fixed assets, since the technical characteristics of these assets still meet market requirements. This form is taken into account when revaluing at replacement cost.
- The second form of obsolescence consists of a decrease in the use value of existing fixed assets due to the appearance on the market of more advanced and efficient ones.
For example, with the advent of digital stations, coordinate stations lose their importance. Fiber-optic cables are replacing traditional cables, computer equipment has replaced telegraph devices, mobile radiotelephone communications are becoming increasingly popular and are gradually becoming on par with wired telephone communications. Computerization is a fundamentally new and promising direction of scientific and technical progress. As a result of the introduction of new technology, obsolete assets are disposed of before the end of their standard service life, despite their physical suitability for use. They become simply unnecessary.
How to determine the degree of deterioration and suitability of funds (formulas)
The degree of wear and suitability for use is characterized by indicators of the technical condition of the OPF: wear and serviceability coefficients.
The wear coefficient characterizes the degree of wear and is determined by the formula:
The suitability coefficient characterizes the degree of suitability of funds for use and is determined by the formula:
Wear and serviceability coefficients are calculated for any date: at the beginning of the year, at the end of the year. Therefore, all values in the formulas are taken accordingly for this date.
These coefficients can be calculated for similar groups of funds, for the enterprise as a whole. It is generally accepted that if the degree of wear is more than 60%, and the degree of technical suitability is less than 40%, the main production assets are of little use and should be updated more intensively.
Example 4.4 The full initial (or replacement) cost of a group of similar equipment at the end of the reporting year is 5,300 million rubles, and the residual value is 1,900 million rubles.
Then the suitability coefficient is determined by formula (4.6):
Kg = 1900 / 5300*100 = 36%.
The wear coefficient is determined by formula (4.5):
Ki = (5300-1900) / 5300*100 = 64%
Since the degree of wear is more than 60%, and the degree of serviceability is less than 40%, the equipment is considered unsuitable for use.
How to determine the degree of renewal and disposal of funds (formulas)
To reduce the degree of wear and improve the technical condition of OPFs, they are constantly updated and disposed of. The degree of renewal and disposal is characterized by corresponding coefficients.
The update rate is calculated using the formula
The retirement rate is calculated using the formula
If an enterprise expands production and puts into operation additional workshops and areas, then the renewal rate will be significantly higher than the retirement rate.
If an enterprise does not build anything, but only renews fixed assets through replacement and modernization, it should strive to ensure that the coefficients are approximately equal. Their equality means that the enterprise is not engaged in accumulating equipment, but in its timely replacement, and strives for more efficient use of it.
- A significant excess of the degree of renewal over the degree of disposal will lead to an excessive volume of fixed assets, which will worsen the efficiency of its use.
- A significant excess of the disposal rate will lead to a shortage of equipment, which will also impair the efficiency of its use.
Example 4.5 At the beginning of the year, the cost of OPF is 2500 million rubles. During the year, new equipment worth 200 million rubles was put into operation. and worn-out equipment worth 150 million rubles was taken out of service. Calculate the movement indicators of the OPF.
Solution:
1) determine the cost of the general fund at the end of the year:
Fk g = 2500 + 200 – 150 = 2550 million rubles.
2) determine the renewal coefficient using formula (4.7):
Kobn = 200 / 2500 * 100 = 7.8%.
3) determine the retirement rate using formula (4.8):
Kvyb = 150 / 2500 * 100 = 6.0%
At this enterprise, the renewal and disposal of funds is carried out approximately equally, which contributes to a more efficient use of general fund.
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Depreciation and amortization of fixed assets
In order to timely replace fixed assets with worn-out resources without damaging the company’s activities, it is necessary to provide a mechanism for transferring the value of retired assets to manufactured products. This is how the depreciation fund is replenished, the funds of which will subsequently be used to purchase new fixed assets. Only under this condition is reproduction of the PF possible.
Thus, depreciation and reproduction of fixed assets are inseparable categories, and the process of successively transferring the cost of fixed assets to manufactured products in order to accumulate funds for the reproduction of fixed assets is called depreciation. The sinking fund is a special reserve that is a financial resource for capital investments.
Calculation of physical depreciation of fixed assets
This type of wear and tear manifests itself as a result of changes in various properties of fixed assets, which appear due to their use in the labor process, as well as the impact of natural and other factors on them. In an economic sense, physical wear and tear is a decrease in the original consumer value of fixed assets. It becomes the result of wear and tear, dilapidation and obsolescence. This type of wear can be determined in two ways:
1. Based on the volume of work: a comparison of the actual volume of work performed with the standard is used. This calculation method can only be used in cases where the fixed asset has a certain productivity . In other words, it can be applied to objects such as machines and machine tools. In this case, wear is calculated using the formula:
- Tfact – time actually worked by the equipment (measured in years);
- Pfact – the average volume of products produced annually (in physical terms);
- Tnorm – standard service life of a fixed asset (in years);
- Pnorm – production capacity or productivity according to standards (in natural units).
2. According to service life. Determined by comparing the actual and standard operating time. This method is applicable to any fixed asset.
Wear calculation
The transfer of the cost of fixed assets to the company's products is carried out by charging depreciation of fixed assets. It is based on the calculation of depreciation, based on the principle of gradualism. Depreciation expenses are considered to be amounts that form part of the cost of fixed assets and are then transferred to the price of the product. They form the cost item “depreciation” in the cost of the product. Their size is set as a percentage according to standards calculated on the basis of approved OS classifiers.
All fixed assets are divided into 10 depreciation groups, and the main criterion for division is the service life of the object. For example, the 1st group includes OSes with a service life of no more than 2 years, and the 10th group includes objects whose operation is expected to last over 30 years. Tax accounting is guided by the determination of the depreciation group of an object based on the classifier, accounting - establishes it based on considerations of expected operation.
The depreciation rate is the percentage of depreciation of fixed assets, the calculation formula of which is the ratio of one unit to the number of months of effective operation of the facility. We can assume that depreciation is an expense calculated as a percentage of the cost of the asset, allocated to production costs and included in the cost of the product.
32. PHYSICAL AND MORAL DEAR AND DEAR OF FIXED PRODUCTION FACILITIESMain production assets of the enterprise
- this is that part of the assets that is designed to be used by the enterprise for a long period of time (more than one year) and gradually (in parts) loses its value.
During operation, fixed assets are subject to wear and tear. A distinction is made between physical and moral wear and tear.
Physical deterioration
means loss of use value of fixed assets. This includes mechanical wear, fatigue wear of metal and other structural materials, deformation of individual structures as a result of sedimentary phenomena, etc. The degree of physical wear depends on a number of factors, primarily the intensity of use of fixed assets, time of actual use, qualifications of maintenance personnel, structural features and operating conditions of the equipment.
There are two methods for determining the degree of physical wear:
– according to the technical condition based on an expert assessment of the object;
– by service life or volume of work. Physical wear and tear occurs unevenly even among identical elements of fixed assets.
A distinction is made between complete and partial wear and tear.
When the existing fixed assets are completely worn out, they are replaced with new ones, for example, capital construction or ongoing replacement.
Partial wear and tear is compensated by repair.
Obsolescence
is expressed in the relative depreciation of fixed assets due to the emergence of new types of equipment before the end of the service life of fixed assets in use. There are obsolescence of the first and second kind.
Obsolescence of the first kind is caused by an increase in labor productivity in industries producing fixed assets, as a result of which similar types of machinery, equipment, etc. become cheaper than previously produced and more competitive as a result of lower prices.
Obsolescence of the second kind is the result of the creation of more advanced and more cost-effective machines, equipment and other types of fixed assets.
Taking into account obsolescence is of great importance in the context of the rapid implementation of scientific and technological progress, as a result of which new (and sometimes completely new) types of machines and equipment appear that have higher productivity and better operating conditions. Under normal (crisis-free) functioning of the economy, the replacement of obsolete models of machines, equipment, transmission devices and other fixed assets is necessary for the production of competitive products with lower production costs than before the replacement of obsolete fixed assets.
The main source of covering costs associated with updating fixed assets is the enterprise's own funds. They accumulate over the entire service life of fixed assets in the form of depreciation charges.
Table of contents
Degree of depreciation of fixed assets
To determine the degree of wear, an indicator such as wear coefficient is used. It shows how worn the object is, i.e. the user will find out to what extent the upcoming replacement of the object is financed as it wears out. It is calculated by the ratio of the amount of accrued depreciation to the original cost of the object.
For example, a company operates a machine with wear and tear, i.e. depreciation charges, in the amount of 20,000 rubles. The initial cost of the machine is 100,000 rubles. Let's calculate the degree of depreciation of fixed assets - this can be done using the formula:
K = AO / PS x 100, where AO is the amount of accrued depreciation, and PS is the original cost.
K = 20,000 / 100,000 x 100 = 20%
This means that the object is worn out by 20%, i.e. The accumulation of the depreciation fund for the purchase of a new machine is 20%. Thus, the depreciation of the enterprise's fixed assets is equal to the amount accumulated for their reproduction.
Types of depreciation of fixed assets
The loss of value of fixed assets is caused by various factors. Depending on them, there are several types of wear. For ease of perception, they are presented in the table.
| Type of wear | Causing factors | Example |
| Physical | Loss of value is due to physical, biological, chemical and other similar characteristics of fixed assets | Destruction of the rail bed as a result of operation Corrosive destruction of the pipeline |
| Obsolescence of the first kind | The emergence of analogues of fixed assets that cost much less | The cutting equipment uses the latest artificial diamonds, which makes them cheaper |
| Obsolescence of the second kind | The emergence of similar equipment with greater productivity. |
Depreciation rate of fixed assets: formula for calculating the balance sheet
You can find data on accrued depreciation of fixed assets in the notes to the balance sheet. They are in the form of Appendix No. 5 to the balance sheet, which was part of the financial statements until 2011. Despite the fact that the mandatory nature of this form has been cancelled, it is used to explain the dynamics of OS in the period under review. The formula used to calculate the amount of depreciation of fixed assets, in relation to the explanations, looks like this:
K = gr.5 lines 5200 f.5 / gr. 4 lines 5200 f.5 x 100
Analysts consider the depreciation rate of a fixed asset together with the serviceability rate of the fixed asset, calculated as the ratio of the residual value to the original value. These indicators characterize the state of the asset and have an analytical meaning, often conditional, since the method of calculating depreciation plays an important role.
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– are calculations acceptable when paying insurance compensation? Judicial practice, generalized at the level of the Supreme Court of the Russian Federation, unanimously notes that the inclusion in insurance contracts of conditions for compensation for damage, taking into account the wear and tear of parts, components and assemblies of vehicles, is not based on the law.
You can get legal advice and assistance in conducting various types of legal matters at the Legal Defense Bar Association. Phones: (495) 790-54-47. Compensation is subject to damage and losses caused, which should be understood as expenses that the policyholder has made or will have to make to restore the damaged vehicle. Under such conditions, the payment of insurance compensation taking into account depreciation wear, as well as its determination taking into account the wear of parts, components and assemblies of the car cannot be similarly stipulated in the contract, since otherwise compensation for damage would be made in a smaller amount than the damage caused , and the property belonging to the victim would be in a worse condition than before the harm was caused. However, despite numerous comments, such a practice that has developed everywhere still has not come to a common beginning. This question arises especially often when making an insurance payment under conditions of complete loss of the insured property, when insurance companies calculate depreciation, thereby reducing the amount of payment in their favor. It is also worth noting that determining the depreciation (physical) wear and tear of a vehicle is recommended during its technical examination. At the same time, it does not matter what type of insurance we are talking about - voluntary or compulsory. The relative loss of value of a vehicle due to changes in its technical condition during operation, leading to a deterioration in the functional, design and operational characteristics of vehicles, is written off as depreciation wear. The main causes of depreciation wear of vehicles are wear, plastic deformation, fatigue failure, corrosion, and changes in the physical and chemical properties of structural materials. It is on these arguments that insurers base their objections. On the other hand, turning, first of all, to common sense, we note that the purpose of insurance is to restore the losses of the insured to the state in which his property was at the time of conclusion of the contract. This circumstance is quite simple to establish, focusing on the insured amount. Accordingly, when insuring a car that was previously used, the insurance company reduces its purchase price from the original from the moment of its purchase from the manufacturer, using specially developed methods for these purposes and forming insurance rates on this basis. Consequently, the depreciation wear and tear of the vehicle is already taken into account when insuring it. Thus, if we adhere to the provisions specified in the paragraphs of the insurance rules governing the deduction of natural wear and tear of a vehicle, it follows that the policyholder paid the insurance premium taking into account the condition of the vehicle, its actual value at the time of concluding the insurance contract, which formed the basis for determining the insured amount , and the insurance compensation will be paid to the policyholder based on the actual value of the property at the time of the insured event, taking into account its depreciation. Here it should immediately be noted that most of the disputes regarding the legality of charging depreciation for the amount of insurance payment are being conducted around payments related to voluntary insurance of vehicles (CASCO). When receiving a payment under compulsory motor liability insurance, the situation is somewhat different. The amount of losses to be compensated by the insurer in case of damage to the property of the victim is determined in the event of complete loss of the property of the victim - in the amount of the actual value of the property on the day of the insured event minus the value of the usable remains. Total loss refers to cases in which repair of damaged property is impossible or the cost of repairing damaged property is equal to the value of the property on the date of the insured event or exceeds the specified value. In the case of other property of the victim - in the amount of expenses necessary to bring the property to the condition in which it was before the occurrence of the insured event. The amount of costs for spare parts is determined taking into account the depreciation wear of components (parts, assemblies and assemblies) to be replaced during restoration repairs. At the same time, depreciation of more than 50 percent of their value cannot be charged on the specified components (parts, assemblies and assemblies). Lawyers at Legal Defense have extensive experience in handling cases in court. You can sign up for a consultation by calling: (495) 790-54-47. Petrov Mikhail Igorevich © MOCA “Legal Protection”
Considerations about wear and tear
Since this topic worries many and not only insurers, I will try to consider it in detail from all sides, both from opponents and from supporters of the use of wear and tear.
Much, I would even say too much, controversy is caused by wear and tear; is it legal or illegal to use it in compensation for damage? Each disputing party has its own compelling arguments and very compelling reasons.
I will try to understand this issue, excluding judicial practice as an expression of judicial opinion and will be based solely on the law and a little on a sense of justice. By the way, justice should be not only in relation to the victim, but also in relation to the culprit, who, oddly enough, also has some rights.
So let's get started. If anyone doesn’t know, wear and tear is a decrease in the value of property due to its obsolescence - abrasion, bruising, rusting, scratches, etc. I don’t consider antiques, so as not to complicate the problem. I will focus on the most common use of wear and tear - which arises when calculating the cost of repairing a vehicle after it has been damaged.
Wear only applies to the parts being replaced; wear does not apply to the repair work itself. A standard situation is when, after an accident, there is not enough money paid by the insurer to repair the car, because the wear and tear of the car is, say, 50 percent and there is not enough insurance compensation to repair the car. The victim feels that he was deceived, that he must now either pay part of the expenses from his own pocket or recover the missing amount from the culprit.
The question arises: who should compensate for wear and tear, the insurer or the culprit? Or maybe no one should?
One of the most frequently used arguments in favor of compensation for damage without taking into account wear and tear is the argument that there are no parts with wear on sale and, accordingly, it is impossible to buy them, since there are no certificates for used parts confirming the quality of worn parts. And that's true. Because at numerous disassembly sites, although they sell used parts at the cost of parts with wear and tear, and sometimes even cheaper, no one will give any guarantee of quality and that no accident will happen due to their breakdown.
In part, everything is correct; no one is obligated to install old, uncertified parts on the car being repaired. However, by installing new parts on his car instead of old ones, the victim improves his car. This begs the question, if someone forced you to improve your car, will these expenses be a loss for you? In my opinion, it won't.
Another most common argument in favor of supporters of compensation without wear and tear is a reference to Art. 15 of the Civil Code of the Russian Federation: “1. A person whose right has been violated may demand full compensation for the losses caused to him... 2. Losses are understood as expenses that the person whose right has been violated has made or will have to make to restore the violated right...”
It would seem that everything is correct, all necessary expenses should be reimbursed. However, one inconvenient question is constantly overlooked, which is the key point in the dispute about wear and tear: what, exactly, is the scope of the violated right? In other words, are the costs incurred always equal to the damage caused?
First, a little legal background. Let's consider Art. 1082 of the Civil Code of the Russian Federation “Methods of compensation for harm.” “When satisfying the claim for compensation for harm, the court, in accordance with the circumstances of the case, obliges the person responsible for causing the harm to compensate for the harm in kind (provide an item of the same kind and quality, correct the damaged item, etc.) or compensate for the losses caused (clause 2 Article 15)". In accordance with this article, there are two possible methods of compensation for harm, in money and in kind.
Everyone knows what monetary compensation is. When compensating for damage in kind, a thing of the same kind and quality is provided. Does this mean that this will change the amount of damage? Is it possible to compensate in kind more or less expensively than in money?
To answer this question, let’s consider what money is. According to Wikipedia, and indeed any economics textbook, money is a specific product that is a universal equivalent to the cost of other goods or services. The key word is equivalent. According to the same Wikipedia - equivalent (from the late Latin equivalent “equivalent”, “equal”). Accordingly, money is the equivalent of a commodity or, in our case, the equivalent of kind. That is, according to the Law, namely Art. 1082 of the Civil Code of the Russian Federation, compensation in kind must be equal to compensation in money. After all, it is logical to assume that the amount of damage cannot and should not change depending on the method of compensation.
Opponents will object that, based on a literal reading of Article 1082 of the Civil Code of the Russian Federation, it is permissible to replace only a thing with a thing of the same kind and the same quality, but a car is an indivisible thing (Article 133 of the Civil Code), and accordingly the condition does not apply to this thing about replacing a part of a thing (part) of the same kind and of the same quality, that is, repair of an indivisible thing must be carried out without taking into account wear and tear. However, this conclusion is easily refuted by the argument that any technically complex thing (for example, a car) is considered an indivisible thing only from the point of view of its operation, and from the point of view of repair, it is completely divisible and is subject to the condition of replacing the thing in kind. If we assume that compensation for damage without taking into account wear and tear is legal, then we will immediately get a bias towards the victims. In this case, the culprits of the accident will become cash cows from whom you can collect as much as you want, the main thing is to confirm the expenses and it does not matter that the repair costs will exceed the cost of the car itself.
Accordingly, the conclusion is: Compensation for damage without taking into account wear and tear will always be an enrichment for the victim.
